Pendragon (LON: PDG) share price had a strong surge on Monday after the UK motor retailer sold Pendragon NewCo 2 to Lithia Motors. The shares currently stand 28% above their last weekly high. Pendragon stock is changing hands at 23.6p on Tuesday, down 0.42% till press time.
UK equities appear to be showing some recovery ahead of the Bank Of England meeting on Thursday. Analysts attribute the recovery in commodity-related stocks as the reason for the bullish sentiment. At press time, the FTSE 100 index is up by 8.6 points and stands at 7,660 points. The FTSE 250 is also up 0.4% on Tuesday.
Pendragon made headlines after it agreed to sell its UK motor and leasing business to Lithia Motors for £250 million. An agreement was also reached regarding the implementation of Pendragon’s management software in Lithia Motor’s 50 sites operating in the UK.
In other news, Pendragon’s half-yearly earnings are also around the corner. In July, the company expects a £36.5 million profit before tax for the first half of 2023. They also mentioned the likelihood of the supply of used cars tightening soon. Pendragon share price currently sits 55% above its yearly low.
The chart for LON: PDG shows the price sitting 27% above the 200 MA, which lies at 18.46p. A deeper analysis of the chart also reveals that the price is currently trading inside the 22.5p-27.9p price gap, which was left back in December 2022.
I expect the bulls to try to fill the price gap of 22.5p-27.9p, provided the current buying pressure sustains. The chart also reveals a strong resistance level of 29p, which was the November 2022 high. The invalidation of this bullish Pendragon share price forecast will be the acceptance below the Monday lows of 22.65p.
In the meantime, I’ll keep sharing updated Pendragon analysis and my personal trades on my Twitter, where you are welcome to follow me.
This post was last modified on Sep 19, 2023, 12:16 BST 12:16